As the market remained optimistic of Nyhamna’s imminent return, gas prices continued to topple for the second consecutive day. The front month August was the only contract on the curve to trade in positive territory as it briefly exchanged hands at 74.57p in late morning trading before the downward pressure returned. The contract closed at 70.51p, its lowest price in over 4 weeks. All other curve contracts opened lower and continued their slide from Monday with the front season losing almost 7p being assessed at 119.21 pence per therm at the close. Storage sites across Europe are 80% full, with many traders and analysts forecasting that facilities will be full some way in advance of the heating season and will easily meet the EU mandated 90% fullness level by November 1. Coupled with this is the return of a number of processing plants in Norway, with 22 mcm expected to return to production by Thursday.
GB baseload power contracts continue to track bearish gas prices lower as prices tumble across the curve. The front winter fell by £5.35/MWh, posting losses totalling 10.1% over the last five days alone. on the prompt power bucked the slight uptick on gas due to high wind generation on the system. Expected wind generation for the rest of this and into next week is expected to be 20% above seasonal norms reducing the impact of gas on the power price, with the cheaper renewable having a larger impact on the prompt market. Prices on the EU carbon market rose yesterday with traded volumes low. The increase in carbon could not however counter the price falls form being driven by the decline on the gas market.
Oil markets rebounded back from Monday’s losses as the market once again took stock of the anticipated supply cuts at some of the worlds’ largest oil producers. Also feeding into the upward momentum was a weak dollar, which makes oil cheaper for holders of other currencies, and can sometimes increase demand for oil. The International Energy Agency is still of the belief that demand for oil will increase in China and developing countries, to an extent that coupled with expected continued supply cuts will result in a tight global oil market despite a sluggish global economy. US small business confidence increased to a seven-month high as optimism for the economy and oil demand improved. Brent as a result of the weak dollar and anticipated tight global market increased by $1.71 a barrel to close Tuesday’s trading at $79.40, a 10-week high for the commodity.
Markets this morning
The UK NBP gas market is continuing its decline this morning with all contracts that have traded so far doing so at a discount to yesterday evening’s close. The front month is trading below 70 pence per therm at its lowest point since the 8th of June, while the winter-23 contract last exchanged hands at 117.0p/th. The UK is slightly short, with supply nominations from Norway increasing day on day, with gas facilities returning daily from maintenance. The returning facilities have helped force prompt prices to a low of 68.00p/th so far this morning. Oil is continuing its bull run from yesterday with the front month edging closer to the $80 per barrel level, trading at $79.60.